Want to become a successful day trader?

A lot of people will tell you day trading is really risky and not to do it. The problem with that is they are confusing "risk" with "time." Day trading is no more or less risky than any other kind of trading. The difference is that you will either make your money quicker, or lose your money quicker. The end result is the same. So if you want to day trade, go for it.

Here's the progression you need to follow:

1. Start out by learning the "50% retracement rule." The idea to take away from this, is that many major financial market moves are followed by substantial retracements. "50" is not particularly the magic number, it just means to be on the watch for large retracements in price.
This is the single most effective and reliable way to trade for a beginner. Other people will tell you about technical indicators, but trading these indicators is actually much LESS reliable in the long run.

2. Pay very little attention to news or tips. Other people will tell you that you should pay attention to a company's balance sheet, P/E, company news, etc. The reality is that these things have very LITTLE to do with stock price in the intermediate horizon (1-2 years), and have absolutely nothing to do with day to day price action. If you don't believe me ... you'll find out.

3. The best way to day trade is to trade leveraged products. This means things like currencies or commodity futures. Leverage is a double-edged sword. It can help you. It can hurt you.

4. The best way to day trade is with a company that offers low commissions and fees and real time quotes. They must be a member of the NFA (National Futures ASsociation), SIPC, and FINRA. These are regulatory agencies that make sure they won't steal your money.

5. Companies that offer futures and currency trading usually offer FREE demo accounts with which to practice. Take advantage of this.

6. As a trader, my concern is not to predict market behavior. My concern is to define expectations for risk and profit.

7. As a day trader, your trading plan must define your risk and profit objectives for each trade you enter. You must not stray outside of these parameters. You must not tie yourself into thinking that you can "predict" market behavior. Instead, you must identify the criteria under which you expect to make money and the method with which to control your risk.

8. As a beginning trader, you will do this by using "stop losses" to cut your losses once they progress outside your risk parameter. You may also take hedging positions in next month futures contracts. You may purchase/sell options. Anything to control your downside.

9. Trading is a probability game. You will take losses. You will make profits. Your trading plan must have a "reasonable" expectation of producing more profits than losses in the *long term.* Your plan should be based on the close observation and classification of the price behavior of financial instruments and their derivatives.

Those steps will get you started with the best chance of success.

If you are highly mathematical (ie. graduate level type of math), you may want to give consideration to the study of statistics as it is applied to finance. Your understanding of the advantages and shortcomings of financial derivatives (such as options) will be greatly improved.